The #EssarOilDeal Presser

Statecraft interests me. And its not like I get to indulge myself centre-stage ,daily. It looked like perhaps I was going to have a chance to draw closer and watch History being made. And I said ‘Why Not’? Saying yes to the vagaries of life a decade ago took me to Texas , the world of Republican oilmen, and their world-view. Link. And almost to the day, a decade later, here was my chance to meet a few more oil-men, this time Indian, and hear some counter world-views.

Moreover, succeed in indulging my curiosity or not, attending a media briefing to mark the successful conclusion of a deal that was Russia’s largest foreign investment ever and India’s largest FDI so far and the largest ever instance of corporate de-leveraging in India till date, in a roomful of press-persons from possibly every leading media house in India, was unlikely to be a total waste. At the very least, I’d have a splendid opportunity to quietly observe the workings of my competitors from conventional media, all in one place.

10 years back, I hadn’t quite found my personal strengths. I just knew at a very organic level what sort of businesses and approaches to moneymaking were just not for me. It took me a while of much pain, misery and deep financial losses before I learnt to play to my strengths and discover what are for me easy ways to create value. Jeff was central to starting off this process of self development. Working with him was sheer living hell for me. And a decade later I can say, it might have been equally hard for him. If ever there were any two people whose every instinctive way of going about something was the exact opposite of each other, it was ours And to make matters truly awful, it was his total commitment to the Socratic and Case Study Method. And there I was, day in and day out, the person guaranteed to always say something that ‘came from far left field’ and disrupt his carefully laid lesson plans! And all those case studies he lovingly wrote ?I can’t think of a single one that was not an LBO. And then there was always me, acutely frustrated that a whole bunch of people could only think in terms of debt to address problems. If in some cases, leverage was necessary to increase gains, in others I could never convince myself that it was not sheer habit that made people reach for credit rather than try something else. And in the succeeding decade, well aware of my disinclination towards leveraged businesses, I almost never kept up with news from vast swathes of the economy. If I was never going to stake anything in these lines of business, why bother assigning time or attention to knowing more ? Oil unfortunately was one of these areas of deliberate ignorance. And then suddenly out of the blue, I had one night to cram as much reading as possible to catch up………………..

By 8pm Saturday, the international press started streaming articles about this deal, and I quickly read all those I could find in English. Then I trawled through old news reports, magazine articles ,interviews and social media. Most content was of the banal variety I normally avoid reading for its simply business as usual. Other people’s business. Businesses being businesses, media trying to make a living, and occasionally politicians talking to make a living. The only thing that kept me up reading into the wee hours were the occasional comment I came across by Prashant Ruia .His sentences were few. Sometimes long. The words measured. With much packed into them for those who were on his wavelength. A person with major differences in his approach to wealth building from me, but nevertheless with points to ponder over. More admirably, graceful and in control in the face of provocation. And an unmistakable tendency to not budge and fight back where necessary. Politely.

The event itself was something of a crush. Well attended by the media and yeah, I had my wish. I got to observe teams from the biggest names from the financial press and TV in action. And there were many questions fired at Prashant. But I was hugely disappointed. Of the whole roomful of press-people, just one of them asked a question that had not already been answered in the articles out since the previous night. And Prashant’s reply to this question is perhaps a clue to why it was deemed the best time sell the Vadinar Refinery. Further, the NPA Problem of banks obviously weighed heavily on the minds of many media teams. Quite a few teams seemed to almost appoint themselves as advocated for these lenders ,keen to use whatever pressure they could bring to bear upon the management to seize money from this sale and divert it to the lenders, never mind the finer details and the correctness or fairness of anything. Yes the LIC, and its bonuses matter to middle-class Indians and the burdens of NPAs are being borne by ordinary bank depositors. However, even assuming all corporates are invariably scamsters ,we need to ask questions about the probity and competence of the lenders in lending to all the schemes that are now considered NPAs. Leading bankers and the LIC are not staffed by the financially unsophisticated, hopefully. Then of course there were all those TV channels keen to forecast which way various bank share prices would move. As if the whole world is filled with punters and market operators !!!!Lastly there were the champions of “minority share holders and their fate due to delisting. And the response that the promoters are voluntarily giving them a higher price than the delisting price. Not knowing the details of who these share holders are, how long they have held the stock and why or having closely followed how the promoters have behaved in the last two decades, I really have no opinion on how well minority shareholders have fared in this deal.

Questions over, it was time for lunch. And as Prashant ,played the good host and circulated over the room, making certain that everyone was well taken care of, I had two occasions to briefly chat with him, even as cameramen swarmed him. And yes, he confirms he deals directly with the Russians. And no, Russian oilmen are nothing like the Mafiosi that American oilmen mostly consider them. Europeans have a much more positive view of Russian oilmen and BP owns a 20% stake in Rosneft.And a bit of googling brought up the stories of strategic cooperation between Rosneft and BP.

So yes, I achieved something of the 2 goals I set for myself. But I left Essar House disappointed. I felt many many good stories, the ones really worth telling, worth listening to,remained untold.

1.Even as most people obsessed over who got to keep how much of the proceeds of this deal and how fair it was. I missed the story of the original stake, the original dream and risk when there was nothing at all at Vadinar, the story of the people who pitched in to create what is now called a Made in India World-Class Asset , their 2 decade long grind and their sacrifices. Even today traveling to this place is far from easy.

2.Then the curiosity of what was the thinking behind Stanlow.

3.Despite my disinclination for businesses with large fixed costs or where debts are inevitable, I find myself strangely fascinated by what Prashant calls his “portfolio of assets” containing the likes of coal bed methane blocks. Once an engineer, always an engineer, I suppose.I find the actual engineering that goes into building and growing assets such as the pretty complex Vadinar Refinery exhilarating. I wonder what Essar might Make in India in the years ahead with the assets in their portfolio.

At this point in time, there are so many people concluding that the Essar Group has been brought low by its bad debts and is perhaps finished after selling the profitable Vadinar Refinery, literally the only saleable asset they still had. I can’t begin to hazard a guess about whether their Steel operations will be salvaged as yet. As with oil, I’ve largely turned a blind eye to news from the steel sector and don’t have any opinion. But if habits are a precursor of success, I’d say a person with fight in them and the skill to build from scratch with something that not many find valuable, has a way of ensuring success. May Pillayar grant him the ability to clearly see the way past his current problems.